TY  - RPRT
        AU  - Koutmeridis, Theodore
        TI  - Cream-Skimming and the Wage Structure
        PY  - 2026/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 18957
        UR  - https://www.iza.org/publications/dp18957
        AB  - Wage inequality has evolved differently across education–experience groups. This paper offers a composition-based explanation. When access to education expands, constrained higher-ability workers leave the non-college pool, reducing its average ability and entry wage as the absence of a credential signals lower expected ability. Experienced non-college wages also respond, but less, because private employer learning gives incumbent firms an informational advantage that shields them from the compositional shift. As cream-skimming progresses, the informational wedges of the two education groups can converge because the remaining non-college pool becomes more compressed and the expanding college pool broadens at its lower end. This convergence appears as a narrowing of the gap in education premia between inexperienced and experienced workers or, equivalently, in experience premia between non-college and college workers. U.S. Current Population Survey data document this compression and a pronounced decline in the relative wage of non-college entrants. The mechanism complements demand-side explanations by highlighting the informational roles of education (signaling) and experience (employer learning) in shaping the wage structure.
        KW  - wage inequality
KW  - education premium
KW  - experience premium
KW  - signaling
KW  - college expansion
KW  - asymmetric employer learning
        ER  -